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“Bakery products fit into our portfolio of offering quality and convenience”
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Tuesday, 01 November, 2011, 08 : 00 AM [IST]
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 The US$407 billion-strong global bakery market has been witnessing a CAGR of 3.93% over the last decade. In India, the urban areas constitute a major share of the Indian bakery segment, comprising 77.5% of the total market, driven by disposable incomes and paucity of time for working population. This is the segment that Bangalore-based Dr P Sadananda Maiya, director, and
P Sudarsahan Maiya, director, Maiyas Beverages and Foods Private Limited, are planning to target, they reveal further in an email interaction with Nandita Vijay. Excerpts
How do you view the scene for bakeries in the country? What are the visible trends?
Bakery products once considered ‘sick man’s diet,’ have now become an essential food item of the vast majority of population. Though bakery industry in India has been in existence since long, real fillip came only in the later part of 20th century. The contributing factors were urbanisation, resulting in increased demand for ready-to-eat products at reasonable costs etc. The bakery units are unevenly spread among states. These are mainly concentrated in the states of Maharashtra, West Bengal, Andhra Pradesh, Karnataka and Uttar Pradesh. These units are predominantly in the unorganised sector.
As the consumers become more mature, we expect to see a large portion of this move away from the unorganised sector to the organised sector. Today, the world bakery market is estimated to be worth US$407 billion. It has grown at a CAGR of 3.93% over the last decade. Asia-Pacific is the fastest growing region with a CAGR of 6.93 %. With the increased emphasis on snack foods, there has been a steady rise in single-serve portions. This trend is evident in baked goods such as bread, rolls, pastries and doughnuts, which have seen a growth of about 3–4% per annum. Another trend worth mentioning is the growing industrialisation in the world bakery market, with developed countries, barring European countries, seeing a steady swing away from artisan bakers and towards more wrapped and specialty products in the categories like breads, cakes and biscuits, which have now become an important fixture in modern retail outlets. As a result of this, many industrial bakery firms now feature prominently within the global food industry and the largest amongst them generate bakery sales of as much as US$ 5 billion a year. Yet one more trend, which is making waves in the advanced US market, is a growing preference for products providing health, convenience and indulgence. Bread, staple diet of most of the US population, is an example of a baked food that has witnessed significant innovations in the recent past. Most of the innovations in this category were focussed upon the development of healthy or functional variants such as natural, functional, light or low carb and organic breads. For example, an organic bread product in the US enriched with green tea and goji berries (goji has a very high antioxidant level and is riddled with trace minerals and nutrients), is marketed for its high antioxidant properties and healthful fibre and wholegrain content. Other innovations are light multigrain bread enriched with Omega 3 and linseed; a white bread with the nutritional value of a wholemeal; a multigrain loaf with Inulin; and special heart-health supporting bread. Indulgence categories like cakes and pastries also displayed innovation and differentiation with a mix of sophisticated and ethnic flavours as well as healthy variants such as low/light, fat-free and sugar-free products.
What are the key challenges in the sector faced by food entrepreneurs?
The key challenge in the short-term of course in the sector is value addition to the current products available in the market and offering the consumer significant innovations in this space. Offering consistent quality products and at the same time hygienic is a challenge, which brands are trying to address.
What was the key reason for you to enter the bakery space?
The Indian bakery market size is estimated at Rs 3,295 crore and is expected to reach Rs 4,308 crore by 2012.
The market is split into the rural market, which is 22.5 per cent, and the urban market, which is 77.5 per cent. The bakery market can be segmented into cakes, pastries and unpackaged biscuits. The cake market in India is valued at Rs 1,088 crore for 2008, and is growing at a CAGR of 10 per cent. The pastries market in the country is valued at Rs 136 crore for 2008, and it is also growing at a CAGR of 10 per cent.
In India, there are 85,000 bakery units, of which 75,000 operate in the unorganised sector garnering 65% market share. The per capita consumption of bakery products as it stands today is 1-2 kg per annum, which compares very low with that in the advanced countries, which is 10-50 kg per annum. The urban areas hog a major share of the Indian bakery, comprising 77.5% of the total market, owing to two vital factors – rising disposable incomes and time constraints in the working population residing in these areas.
This is the segment that Maiyas would like to target and these products fit into our portfolio of being able to offer a quality and convenient vegetarian product.
What is the total number of products on the range in this segment? Which are the fastest- growing products? What has been the response to the bakeries at Malleswaram and Indiranagar in Bangalore?
Currently there we have a total of 50 products across the category. Among the fast-growing across outlets so far are bread, pastries & cookies and these have been growing at over 30% at our outlets. Demand for our range of products has been tremendous at the outlets opened in Malleswaram and Indiranagar. These two outlets now sell more than what we were selling at Jayanagar.
There is stiff competition in the bakery segment with a large unorganised presence, how would Maiya compete in this space?
As witnessed from our experience, the response to the products from our three locations, Jayanagar, Malleswaram and Indiranagar is tremendous. Despite the huge presence of unorganised players, there is a great demand for quality branded product in the sector. The largest states for these products remain Karnataka, Andhra Pradesh, Maharashtra and West Bengal. Maiyas will offer a premium quality range of products to consumers through their outlets. The number of own stores will grow to 6 in the next few months. Bakery products are expected to contribute about 30% of the turnover at each location.
Are you adopting any new production technologies for increasing the shelf life and so on?
These are available only at our outlets and also most of them are short shelf life products. However, we are working on innovations on process and technology that will allow a greater shelf life that will assist us in expanding our reach.
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